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Audit Exemption

With recent amendments to the Singapore Companies Act - The Companies (Amendment) Act 2014, a significant number of companies that previously required an audit will no longer need to do so.

 

The audit exemption is applicable for financial years beginning on or after the change in the law (1 Jul 2015). Eg. Financial statements from 1 July 2015 to 30 June 2016.

 

Qualification Criteria

Currently, a company is exempted from having its accounts audited if it is an exempt private company with annual revenue of $5 million or less.

 

This approach is being replaced by a new small company concept which will determine exemption from statutory audit. Notably, a company no longer needs to be an exempt private company to be exempted from audit.

 

A company qualifies as a small company if:-

a. it is a private company in the financial year in question (not a public company); and

b. it meets at least 2 of 3 following criteria for immediate past two consecutive financial years:-

i. total annual revenue ≤ $10m;

ii. total assets ≤ $10m;

iii. no. of employees ≤ 50.

 

For a company which is part of a group:

a. the company must qualify as a small company; and

b. entire group must be a "small group" to qualify for the audit exemption.

 

For a group to be a small group, it must meet at least 2 of the 3 quantitative criteria on a consolidated basis for the immediate past two consecutive financial years.

 

Where a company has qualified as a small company, it continues to be a small company for subsequent financial years until it is disqualified.

 

A small company is disqualified if:

a. it ceases to be a private company at any time during a financial year; or

b. it does not meet at least 2 of the 3 the quantitative criteria for the immediate past two consecutive financial years.

 

Where a group has qualified as a small group, it continues to be a small group for subsequent financial years until it does not meet at least 2 of the 3 the quantitative criteria for the immediate past two consecutive financial years.

 

Transitional Provisions for existing companies

An existing company can qualify as a "small company" if it is a private company and meets the quantitative criteria in the first or second FY commencing on or after the date of commencement of the "small company" criteria.

 

FAQ

Q: How do companies determine their total assets and total revenue?

A: The total revenue and total assets of a company would be determined by the accounting standards and what appears as the total revenue or total assets in the financial statements of the company.


Q: How do companies determine their number of employees?

A: The number of employees is based on the number of full-time employees employed by the company at the end of the financial year.

 

For further details, you may refer to the below:

- https://www.acra.gov.sg/details_on_small_company_concept_for_audit_exemption.aspx; and

- THIRTEENTH SCHEDULE of Companies Act, Cap. 50. 

 

 
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